Bond (surety)
A financial guarantee issued by a surety company on behalf of a contractor, ensuring that the contractor will fulfill their contractual obligations.
Construction bonds protect the owner from financial loss due to the contractor's failure to perform or meet their payment obligations. They are typically required for public construction projects but can also be used on private projects.
Used in a sentence
We obtained a bond to guarantee project completion and protect against financial risk.
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Learn MoreLearn more about Bond (surety)
How the Balance Sheet Affects Surety Bond Underwriting
In construction finance, a balance sheet is a financial document that a business creates. It lists all of the business’s assets, liabilities, and owners’ equity to give a snapshot of the company’s net worth. Surety bonds in construction act like a promise that a surety company makes to an owner on behalf of a contractor. […]
The Contractor’s Guide to Increasing Bonding Capacity
Contractors who want to work on bonded construction projects will need bonding capacity — the ability to secure a bond to help protect the owner against performance, default, financial or warranty issues. The dollar amount of bonds extended to a contractor by a surety company is called their bonding capacity. In this article we’ll cover […]
How Construction Payment Bonds Work — and Why They Matter
From the smallest home renovation to the largest public works project, the world of construction is backstopped by one fundamental principle: Trust. Owners and public agencies must be able to trust their general contractor can do the agreed-upon work, and specialty contractors and suppliers must trust they’ll be paid in full. Many mechanisms and financial […]
Performance Bonds for Construction Explained
Performance bonds provide a guarantee that a contractor will fulfill all of their obligations under a construction agreement. Performance bonds are a subset of contract bonds and guarantee that a contractor will fulfill the terms of the contract. If they fail to do so, the Surety company is responsible for completing the contract obligations, either […]
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